Budgeting Tips Every Entrepreneur Should Know
Thursday, April 19, 2018, 6:00 AM | Leave Comment
Budgeting is a key component in running a successful business, but it is often one that is overlooked in the hectic pace of daily activities.
In the fourth quarter of each year, savvy business owners sit down with their financial statements and review their sales and expenses for the past year, with an eye toward preparing for the New Year.
But you should also be reviewing your costs throughout the year.
Here are a few effective ways to budget wisely for the coming year.
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Anticipate Payroll Needs
In many cases, a business owner will be able to anticipate how much of his or her revenue that will have to go to payroll costs, based on past needs, new contract requirements and the general state of the economy. However, sudden periods of growth can occur that can throw your budgeting off to a significant extent.
Many savvy business owners explore the possibility of temporary work to fill gaps in their payroll during busy periods.
You can also consider adding a part-time employee or two, which will keep work flowing, but not add to your benefit costs.
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Monitor Expenses Carefully
You should never continue with the same vendors, year after year, without examining the prices you are paying for parts, supplies or other items.
New vendors spring up periodically, and they may be willing to offer better prices while they establish their businesses more firmly.
You can also go to your current vendors to re-negotiate prices, if you are willing to ensure a certain amount of business for them in the coming year.
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Annual Review of Insurance Requirements
Insurance costs can creep upward if you stay with the same company, year after year.
Make some time in your schedule to review your insurance needs for the coming year and get some quote from local insurance agents that deal with many companies.
You can often get a better deal by switching companies, than by staying with one company as they raise their rates.
The appropriate types of insurance, at reasonable cost, can be a powerful bankruptcy risk solution for your business.
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Keep a Tight Rein on Credit Sources
If you use a credit card or line of credit for supplies, equipment or other needs, make sure your purchases stay within your budgeting for these items.
You may be lucky enough to have a great deal of credit at your disposal, but you must protect your ability to re-pay these costs, without causing undue damage to your business’s expenses.
If your employees are allowed credit cards, only allow purchases up to a certain limit. Anything more than this amount should be subject to review and approval.
It may also be a good idea to analyze your credit risk at a place like CreditRiskMonitor.
Budgeting for your business becomes easier and more precise as you become more experienced at it. Smart entrepreneurs learn to keep an eye out for budget busting developments in the general economy and in their particular industry.
If you stay abreast of current events, as well as pay attention to your normal expenses, you will be able to keep your business healthy and growing.
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